Notes forming part of Accounts
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 May 2010
Please clarify me on this issues its really very urgent for me...
While finalising the Accounts for the statutory audit for a listed company we have to provide for Contingent liabilities not provided in the accounts in the Notes forming part of Accounts:
1. Always Contingent Liabilities are not provided in the Accounts, if it is provided means it becomes a Provision - then there will be impact in the books, so it cannot be a contingent liability - am i right? - This explanation is needed since i need to understand the concept of Contingent Liability.
2. In case of Foreign Letter of Credit issued both for Capital Goods and Raw Materials which one has to be shown as Contingent Liability - To be more precise Letter of Credit which are open as on 31.3.2010
While finalising the Accounts for the statutory audit for a listed company we have to provide for Contingent liabilities not provided in the accounts in the Notes forming part of Accounts:
1. Always Contingent Liabilities are not provided in the Accounts, if it is provided means it becomes a Provision - then there will be impact in the books, so it cannot be a contingent liability - am i right? - This explanation is needed since i need to understand the concept of Contingent Liability.
2. In case of Foreign Letter of Credit issued both for Capital Goods and Raw Materials which one has to be shown as Contingent Liability - To be more precise Letter of Credit which are open as on 31.3.2010
CA. B.SRINIVASULU
(Expert)
29 May 2010
If it is an irrevocable letter of credit and goods has been despathed on 31-3-2010 you have to pass the entries. If is revocable letter of credit then you should show it as contingent liability. If it irrevocable letter of credit and goods are not despatched as on 31-3-2010 then you should show it as contingent liability.
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